IPO could win war

The Commodity Futures Trading Commission has declined to regulate ICE Futures (the former International Petroleum Exchange), which is regulated by the Financial Services Authority in London, and recently listed contracts on WTI crude oil in direct competition with the New York Mercantile Exchange’s benchmark contract. The WTI contract was approved for trading in the United States under a CFTC no action letter, but Nymex has long contended that Ice has a strategic advantage over Nymex because different reporting requirements.

In other news, Nymex Holdings Inc. has signed an agreement with the Commodity Exchange Inc. (Comex) governors committee to list all Comex contracts and new metals contracts electronically for side-by-side and overnight trading. According to the definitive proxy agreement, the metals contracts would trade on the CME’s Globex trading platform and could clear on Nymex’s ClearPort. Nymex would have the right to distribute trading privileges to third parties and the Comex trading floor will be preserved for five years from the date of the deal.

If Comex shareholders approve the deal, it would replace the 1994 merger agreement between Nymex and Comex. Each Comex member would receive 8,400 shares of Nymex common stock for each Comex seat and an aggregate payment of $10 million from the proceeds of an initial public offering of Nymex, which is expected to IPO on November 16. The exchange is valued at $5 billion, with 86.49 million shares outstanding and a strike price of $48 to $52 USD. The firm filed form S-1 with the Securities Exchange Commission on July 17.